U.S. Payroll Employment Reduced by Storms & Strike During October; Earnings Improve & Jobless Rate Steadies

• Hurricanes close businesses & reduce production.
• Increase in earnings extends trend of improved growth.
• Unchanged jobless rate remains below July peak.

Nonfarm payrolls increased 12,000 (1.3% y/y) in October after rising 223,000 in September, revised from 254,000, and 78,000 in August, revised from 159,000. Expectations had been for a 125,000 rise in the Action Economics Forecast Survey. The damage from Hurricanes Milton & Helene plus the Boeing strike pulled the three-month average change to 104,000, the weakest since a decline in June 2020.

Average hourly earnings increased 0.4% last month following a rise of 0.3% in September, revised from 0.4%. Earnings growth rose to 4.0% y/y from 3.9% in September. It was the strongest y/y increase since May, but remained below the 5.9% high in March 2022. A 0.3% October increase had been expected.

The unemployment rate, measured in the household survey, held at an expected 4.1% in October. It reached a low of 3.4% in April of last year. Household employment fell 368,000 after increasing 430,000 in September. The labor force declined 220,000 after a 150,000 September gain. The overall unemployment rate, including workers who were marginally attached & working part-time for economic reasons, was unchanged at 7.7%.

In the payroll survey, private-sector employment declined 28,000 (+1.2% y/y) in October after rising 192,000 in September. Construction sector employment increased 8,000 (2.7% y/y) last month after rising 27,000 in September. Factory sector payrolls fell 46,000 (-0.4% y/y) after falling 6,000.

Private service-producing employment improved 9,000 in October (1.3% y/y) after a 169,000 September rise. Increases varied greatly amongst service sector categories. Private education & health service jobs rose 57,000 (3.8% y/y) but leisure & hospitality employment fell 4,000 (+1.4% y/y). Professional & business service jobs weakened 47,000 (-0.1% y/y), down for the fourth straight month. Within that category, the number of temporary jobs fell 48,500 (-7.6% y/y) and have fallen consistently since a March 2022 high. Trade, transportation & utilities employment fell 1,000 (+0.6% y/y) while financial activities jobs held steady (+0.3% y/y). Information sector employment increased 3,000 last month (0.3% y/y).

Government sector payrolls improved 40,000 in October (2.0% y/y) after increasing 31,000 in September. Local government jobs improved 21,000 (2.0% y/y) while state government employment rose 18,000 (2.3% y/y). The number of federal government jobs increased 1,000 (1.7% y/y).

The 0.4% October rise in private-sector average hourly earnings reflected a 0.3% gain (4.7% y/y) in the goods-producing sector. Earnings in construction improved 0.3% (4.6% y/y) while factory sector earnings rose 0.3% (4.8% y/y). In the services sector, earnings rose 0.4% last month (3.9% y/y). Information sector earnings strengthened 1.4% (5.1% y/y) while professional & business service-sector earnings increased 0.6% (5.1% y/y). Leisure & hospitality earnings rose 0.2% (3.6% y/y). Financial sector earnings increased 0.5% (4.4% y/y). Private education & health services earnings edged 0.1% higher (2.9% y/y) while trade, transportation and utilities pay jumped 0.5% (3.1% y/y) in October.

The length of the average workweek in the private sector stood at 34.3 hours in October for the third straight month. The workweek in the goods-producing sector of 39.7 hours compared to 39.8 hours in the previous two months. The construction sector average workweek eased to 39.0 hours from 39.2. The factory sector workweek was little changed at 39.9 hours while the average workweek in the private service sector was steady at 33.2 hours. The aggregate weekly hours index in the private sector, a key indicator of production and income, increased slightly versus the third quarter.

In the household survey, the steady 4.1% jobless rate occurred as employment fell 0.2% and the size of the labor force eased 0.1%. The labor force participation rate of 62.6% compared to three straight months at 62.7%. The rate for teenagers dropped to 35.8%, while for individuals aged 20-24, the rate rose to 71.8%, a six-month high. The participation rate for workers aged 25-54 the rate fell to 83.5%, down from a high of 84.0% three months earlier, but for workers 55 and over, it was 38.6 hours for the third straight month.

The employment/population ratio for all workers eased to 60.0% in October from 60.2% in September. It remained below its high of 61.1% in February 2020, just prior to the pandemic.

The employment and earnings data are collected from surveys taken each month during the week containing the 12th day of the month. The labor market data are contained in Haver’s USECON database. Detailed figures are in the EMPL and LABOR databases. The expectations figures are in the AS1REPNA database.